Systematic Hog Price Management: Selective Hedging and Long-Term Risk Sharing Packer Contracts
Abstract
In addition to futures and options markets, long-term risk sharing hog procurement contracts offered by packers provide some degree of price risk protection for pork producers. The window contract and a moving average hedging strategy generated similar average returns and level of profit risk protection. The cost-plus contract provided a greater degree of risk protection from prices below cost of production and used a ledger account to ensure that prices average the same as the cash market over the long run.
Keywords: ASL R1504
How to Cite:
Lawrence, J. D. & Wang, Z., (1998) “Systematic Hog Price Management: Selective Hedging and Long-Term Risk Sharing Packer Contracts”, Iowa State University Animal Industry Report 1(1).
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